Dear Friends, as we all know, due to COVID-19 Impact, MSME Industries which are the backbone of the Indian Economy are facing Cash Crunch situation. The Government of India is taking steps to revive the Indian economy as soon as possible. To help the MSME Sector, the Government of India has allocated a huge sum for Existing MSME Units as well as new Startup. Now, the main focus of Government is in making “Atamnirbhar Bharat” for that many announcements are made by our honorable Prime Minister like no global tender up to Rs.200 Crore for all fresh Government projects, etc.
Announcements are made by Government; however, the funds will be released through banking channel, which requires documents like basic KYC of Entrepreneur, Income Tax Return documents, good CIBIL Score, GST Records and the most important is Project report which describes how the projects will be started and how the funds raised from the bank will be refunded.
In the case of NGOs also, if they need Government Grants, CSR Funding from Companies then they also require Project report. There is no fixed format of the Project report; however, a project report must consist of a basic detail of all aspects which may impact the banker/ Donor funding decision. In below points, I am trying to describe the basic details which must be present in project report. Some desired changes are required to be made by NGO’s as per the applicability of the below points in their project report.
This is the starting point of a project report. In this part, you have to explain about the Firm, its founder, its background experience, the project for which fund required and how the raised funds will be utilized. This is the snapshot of the detailed project report. It must be prepared with due care.
2. Founders Complete Detail along with their experience
In this part, you have to provide KYC Detail of Founders along with their Education Qualification, Work Experience, prior experience of handling any project with its testimonials and their net worth related documents. Founders having good cibil score and having good net worth are having more chances to get approved their project.
3. Techno Feasibility Report
In this part, you have to give a brief of the project explaining the current position of Industry in which you are going to start your business and the machinery which are to be used by you to start your business and how you get your capital goods, raw material and how your project compete with industry competition to survive.
4. SWOT Analysis of your products
Here, you may give the SWOT Analysis of your product with Industry products which are already available in market. You should give proper emphasis here so that you can convince the banker for approval of their project funding.
In the case of NGO’s, they must give detail about the extra steps they will take for social welfare if the fund is allotted to them, which other NGOs are not doing.
5. Location of Project and facilities available
In this part, you give a detailed explanation of project location, infrastructure facilities available like road transport, electricity supply, law and order situation, availability of workers, raw material supply network and storage facility of raw products and finished goods.
6. Manufacturing Process
Here, you have to give a detailed presentation of machinery and raw material required for production. If feasible, give production mix ratio detail so that production cost will be analyzed. If possible present the detail in form of a flow chart for easy understanding. Here you can give detail of Installed capacity and used capacity detail year-wise according to future sale and revenue forecast of project.
7. Applicability of Licenses
In this part, we have to give details of licenses that are required to start business and there issuance and renewal time required.
8. Means of Financing
In this part, you have to give in details, how the project will be financed. How much amount will be funded by the founder and how much funding is required from the bank. What will be the mode of funding from banks like CC Limit, Term Loan, Etc.?
9. The financial cost of Project
This is the main part of the project report. After describing the project, its forecast according to SWOT Analysis, now we have to give a detailed report on the cost of the project and its ingredients like the cost of land, cost of machinery, other fixed costs, initial raw material cost, etc. This cost must be more than project funding we require from banks.
10. Profitability Statement
After the preparation of Cost part, now we have to focus on revenue and profitability part of the project, here we have to give a detailed analysis of our sale process, expected sales, cost involved and expected profit which we will earn and how we will repay the loan and interest amount of the bank.
Above mentioned points are mandatory points which must be explained in a project report. Many other points may be added according to the nature of the project. Our main focus is to give in detail the required information to the banker so that they can easily decide that they will get the return of their lend amount or not.
For NGO’s – In case of NGO’s preparing their project report of taking grant from Government / CSR Funding, the information will be the same but the presentation may vary according to nature of project and NGO’s working area.
Disclaimer: This article is for the purpose of information and shall not be treated as a solicitation in any manner and for any other purpose whatsoever. It shall not be used as a legal opinion and not be used for rendering any professional advice.
The Author “CA. Shiv Kumar Sharma” can be reached at mail –firstname.lastname@example.org and Mobile/Whatsapp – 9911303737/ 9716118384